I (30/F, single, no kids) am in this sub (originally posted to r/PovertyFinance and encouraged to share here by @oldgringo) because of the above debt, my low savings, and an absolutely massive student loan bill that I don't expect to pay off any time in the near future. My income, while very low for an attorney, is okay. It was the main reason I was able average throwing ~$638/month at my credit cards, which I understand isn't necessarily realistic for a lot of people. However, I still think the concepts I discuss below could be helpful, and I hope to inspire someone else on your journey.
My debt: A combination of medical bills, fees from several abrupt moves, car repairs, and consumer purchases. I have always been a "someday" girl. Someday I'll have more work-life balance, someday I'll eat better, someday I'll pay off that credit card with...phantom money that breeds in my wallet at night, I guess. I have also been a "I work hard, I deserve this bag/$40 sushi/neck massager" girl. The below are general descriptions of what I actually did to pay my debt:
My debt: A combination of medical bills, fees from several abrupt moves, car repairs, and consumer purchases. I have always been a "someday" girl. Someday I'll have more work-life balance, someday I'll eat better, someday I'll pay off that credit card with...phantom money that breeds in my wallet at night, I guess. I have also been a "I work hard, I deserve this bag/$40 sushi/neck massager" girl. The below are general descriptions of what I actually did to pay my debt:
- I looked at the actual math and counted up my debts, assets, and income. For a long time I didn't look at the numbers, and I think I listened too much to the irrational part of my brain that said if I could just avoid looking, everything would be okay. I would periodically panic about my high debt levels but never in a way that led to action. Mostly I lived with a simmering sense of dread about checking my balances. My AmEx balance was easy to ignore because I bank with BOA, and I could just...not open the app. Unfortunately, sticking my head in the sand never made my life any easier. It just delayed the pain a little, while giving me a different, worse pain in return.
- I listened to and researched people like Dave Ramsey, Stacey Flowers, The Financial Diet, Matt D’Avella, Stephan Graham and Mr. Money Mustache. I started looking for people who were into debt repayment and frugality, over and over, rather than people who were into lavish lifestyles and material things. As a result I stopped using my credit cards, saved up $1,000 in an emergency fund, and got current on all my bills. I still had the credit cards, but I refused to buy into the common narrative that it was "impossible" to live without them. A big part of this is that I became willing to take what advice was useful to me and leave the rest, rather than dismissing the entire person.
- I took an honest look at myself and my points of weakness when it came to money, and refused to justify those to myself anymore. I had a spending problem, particularly on Amazon, and was constantly trying to buy my way to success, and justifying those purchases as “necessary” for X goal. People like Break The Twitch call this the “False First Step,” where you substitute the endorphin kick of (for example) running, with the endorphin kick you get from buying running shoes, then never actually go for a run. Marie Kondo (The Life-Changing Magic of Tidying Up) and Fumio Sasaki (Goodbye, Things) taught me to value and be content with the things I have, and to take a long, hard look at new purchases. Another point of weakness was that I could justify anything against my massive student loan to myself, but eventually I refused to say “What’s the point? I’ll still be massively in debt” anymore.
- I figured out what I could afford to consistently pay, every single paycheck toward the debt. For awhile I made panicked, inconsistent payments on my credit cards, then went months without doing anything about them. The slow, steady progress I gained was hugely motivating. It was more conservative than I would have liked, but when stacked up against my other bills and obligations I realized it wasn’t sustainable to throw all the money I had on it.
- I transferred $10,000 of debt to a 0% APR/0% transfer fee promotional card at my bank. When I realized that interest was eating me alive, and I had already done the above calculation, and made sure that I could pay this off by the time the promo period ran out and interest went up to 21%. This had the added benefit of having both of my credit cards in one place, so I can see my checking, savings, and debts in one spot. Just seeing this number every day has been huge.
- Other sources of income besides my main job. I sold a few things on Poshmark and eBay for ~$250 in profit. I use the app SurveysOnTheGo, did some work for Amazon’s MTurk, and (in the spirit of transparency) my parents gave me $500 as a gift that I wasn’t expecting. Additionally, I ask for useful things like socks, my shampoo/conditioner, and skincare products for my birthday and Christmas, which cuts down or eliminates those yearly costs.
- Good, Better, Best. Part of this process has been figuring out what I can live with. I can live with putting an average of $638/month on my credit cards. What I can’t live with is meal prepping every single meal, using the Metro instead of an Uber 100% of the time, and swearing off coffee. But replacing my $6/drink Starbucks habit with a $6 bottle of coconut creamer (which I did after listening to Stephan Graham yell about his 20 cent iced coffee) still makes a huge difference. Buying a $3.99 salad in the grocery store isn’t the pinnacle of financial frugality, but it’s cheaper than making a $25 UberEats purchase at lunch.
- I figured out what motivated me. I play games with myself, like going a month without making any purchases at all beyond a defined list, or trying to only spend X amount of money on groceries. I open my banking app almost every day and get excited when I see my FICO score going up (last October it was 687 and now it’s 765). I have actual rules (that are written down) for my normal spending habits. Again, transferring that balance from the AmEx, so all my debts were in one place, was a big motivator. I found that trying to do a budget down to the dollars and cents was exhausting, but I absolutely know what all of my expenses are, when they’re going to hit, and I know my average monthly costs for things like car repairs now. I also have travel goals and financial goals written down.
When I first started I honestly thought I'd never pay it off, but I did! It is possible!